Prioritise Service Offerings For Increased Revenues and Reduced Risk
From Shortlist News following Captain's Table Session - Recurring Revenue Streams For Recruiters
Unbundled services and statement-of-work management are among the areas recruitment leaders are pursuing to diversify their revenue streams in light of industry headwinds.
For those companies that are still solely doing perm or temp recruitment, branching out to the other is an obvious start, leaders have agreed at a recent Captain's Table event, hosted by Navigator Consulting MD Tony Hall.
One such leader is "on the voyage now. We've come on board to build a temp desk and part of the reason is... people start on 'zero', first of every month, so it'd be nice to have some annuity revenue".
"If you're just doing temp or contract, that's great for recurring revenue streams, but the problem is, if another recruitment company is doing their permanent recruitment, is there a danger that they might build better relationships somehow?" asks Hall.
One idea attendees are considering is unbundling or, as one leader says, "doing one part of the recruitment process", and then charging it accordingly.
"New clients are just overwhelmed with all the candidates that are flying in with their job ads; you can help them reduce it down and then provide part of the service for them as a way of building credibility," Hall says.
"Even if it's not a full fee to start, [it's about] building credibility, building relationships and it gets you to this 'trusted advisor' service."
With SOW management, recruiters can "package up work, find a leader, build the team, and charge a fixed price", one delegate says.
"So let's say you have an IT consulting firm and they're asked by an organisation to do a break/fix on their server or something, they'll say, 'okay, well it's going to cost you 'X' for all of these different line items at work', and it won't matter how many people are doing it or how long it'll take, they'll provide that on a fixed-price basis," he says by way of example.
"There's plenty of websites where you can actually put that work out to a consultant... and you can say to the customers, 'okay, we'll go out and we'll find the lead consultant and we will get that piece of work packaged up for you'.
"You don't have to go out and do your usual search, just go to Expert360 or a similar platform, put the piece of work out there, they'll come in, you screen the people, put that work to the customer and then you start with whatever margin you want on top of that."
"There are many companies that actually become so much more embedded in workforce planning and resource planning than just reaction recruitment," according to another agency leader at the event.
He explains that if recruiters can build a strong relationship with hiring managers, or project leaders, solution designers, or the business analyst, "you can get really embedded and say, 'what is your forward-looking projection? All of these projects and the start dates, we can go and market map all of the contracts and those skills that you might need to identify when their projects are running with other companies and give you an idea of when the capacity of these skills in the market will be able to meet your demand for your various projects'".
"And then we can start talent pipelining for that in advance and that could be a service fee that you charge upfront to give them an idea of whether their projects can be properly resourced on time," he says.
Specialist knowledge and advisory
Becoming more of a "trusted advisor" or moving into the consultative aspects of recruitment service can go a long way towards assisting revenue stream diversification, says Hall.
One delegate whose recruiters work with start-ups shares that his team have been facilitating "strategy days" with clients' senior executives.
"They'll come in and say, 'where do you want to be in your business? Where are you going to grow?', and all they do is run it. So they've basically got the platform from another strategy expert and they just go in there as a trusted advisor, and then they obviously know where the growth is going to be," he says.
Hall says this highlights the importance of having highly specialised knowledge in an industry. "You need to be doing your research. You need to really understand the market that you want to consult in to be able to run a strategy workshop."
Ultimately, if offering additional services, it's important to get a specialist onboard, Hall says. "Get someone that has done it before."
Further, "you've got to make sure that person not only is technically good, but they also have business development skills".
But before any of this happens, Hall advises leaders to ensure they've maximised their existing business first, in terms of having "the best clients, best margins... really maximising current opportunities", as well as the right infrastructure.
"Get that all right first before you do spread too wide... which is the big downside of diversification."